a) Provide an explanation for the following accounting scenarios and justify your answer using theories studied...

 

Transcribed Image Text:

a) Provide an explanation for the following accounting scenarios and justify your answer using theories studied in ACCY903. i. Management recognises revenue in the current period rather than deferring the revenue because they are concerned that the limits of a debt covenant may be breached. ii. Management defers revenue because a product the company manufactures has been demonstrated to cause harm. Management increases the useful life of fixed assets because of trade unions demands for a salary increase for its members. iv. Shareholders agree on the appointment and engagement fee for a firm of external auditors at the annual general meeting. Management defers an impairment loss in the year that recorded profits will exceed budget forecasts. 111. v. (15 marks) b) Critically evaluate whether market for accounting information is efficient and provides timely information for decision-makers. (5 marks) a) Provide an explanation for the following accounting scenarios and justify your answer using theories studied in ACCY903. i. Management recognises revenue in the current period rather than deferring the revenue because they are concerned that the limits of a debt covenant may be breached. ii. Management defers revenue because a product the company manufactures has been demonstrated to cause harm. Management increases the useful life of fixed assets because of trade unions demands for a salary increase for its members. iv. Shareholders agree on the appointment and engagement fee for a firm of external auditors at the annual general meeting. Management defers an impairment loss in the year that recorded profits will exceed budget forecasts. 111. v. (15 marks) b) Critically evaluate whether market for accounting information is efficient and provides timely information for decision-makers. (5 marks)

Answer rating: 100% (QA)

a i Revenue should be recognized in the period in which it is generated based on the revenue recognition concept As per revenue recognition concept re... View the full answer